LOGISTICS THE DISTRIBUTION CHANNELS

Members of the Distribution Channel

▪ Manufacturer/Producers:
o Converts the raw material or semi-finished goods into finished
products/services.
o Responsible for providing a good/service that is of a high quality and at a
reasonable price/ affordable price.
o Examples: manufacturers of motor vehicles, appliances, electronics, clothing
and process foods such as ketchup, soft drinks; producers grow crops or raise
life stock example citrus, poultry, vegetables.
▪ Wholesaler: [Middle Man]
o This is a middleman who sells finished goods to retailers and even distributors
o Links the manufacturer to the retailer.
o Functions:
▪ Risk bearing by purchasing large quantities of goods from
manufacturer
▪ Warehousing of goods
▪ Breaking bulk of goods [repackaging]
▪ Promoting sales and marketing of goods/service from manufacturer
▪ Maintain a stable price
▪ Grant credit sales to retailers.
▪ Form the link between consumers and manufacturer/ producer

o Examples: wholesale merchants, cash and carry wholesalers, agents and

brokers

▪ Retailer: [Middle Man]

o Also a middleman who obtains goods from either the manufacturer/ producer
and wholesaler and then sells it to the final consumer.
o Functions:
▪ Breaking Bulk of goods and sell in smaller quantities [REPACKAGING]
▪ Providing convenient outlets for customers
▪ Providing credit sales to customers
 ▪Providing the link between the wholesaler and the producer and the
consumer and can advertise on behalf of manufacturer
▪ Providing After Sales Service
▪ Offering the customer a wide variety of goods
o Examples include: supermarkets, department stores, door-to-door sales
persons, market vendors.

▪ Agents: [Middle Man]

o This is an intermediary (middleman) between the producer and manufacturer
or seller and the consumer
o They sell the product/service on behalf of the producer/seller for a fee or
commission
o They can act as a representative of the producer/manufacturer.
o Examples include: Car Sales men / agents, Real Estate, Travel agents,
Insurance Brokers, Investment Agents like Stock Brokers.
▪ Franchise: [Middle Man]
o An arrangement between a person who wishes to operate a business under
the name of the franchise and the company itself
o The owner of the business (franchiser) is authorized charges royalty fees on
the person operating the business (franchisee), as a percentage of sales.
o The franchisee maintains the standard of the good/service and markets it
within their country.
o The franchisee sells the product to the final consumer.
o Examples: KFC, Hilton, Sandals,, Subway, Mc Donalds

▪ Consumer
o This is the individual who buys the good/service for their personal use.
o They have a consumer right to quality product at fair prices.
o Also known as The Final Consumer